July 19, 2016 entries

July 19, 2016

In the news release from the U.S. Environmental Protection Agency's Headquarters announcing a major step towards resolving last year's VW diesel engine emissions scandal, emphasis is placed on the fairness of the $14.7 Billion partial settlement between Volkswagen, the EPA and California Air Resources Board (CARB). Yes, up to $10.03 billion is set aside to compensate consumers under the program, $2.7 billion will fund projects across the country that will reduce emissions of NOx, and VW will "invest" $2 billion toward improving infrastructure, access and education to support and advance zero emission vehicles (ZEVs). Unfortunately, it appears that in the EPA's eyes, the class of ZEVs that include plug-in electric vehicles (EVs) will receive more assistance than fuel cell electric vehicles (FCEVs). In my eyes, this unequal footing of EVs and FCEVs is not fair.

The text of the partial consent decree details how the $2 billion "investment" by VW will be "invested" over the prescribed 10-year period. Appendix C details the allowable financial assistance for EV charging stations and FCEV hydrogen refueling stations:

60-100% of the cost for EV charging stations, depending on the level of public access, but only

25-35% of the cost for FCEV hydrogen refueling stations, depending on the size of the station (expressed in kg/day.)

Obviously, it appears that the EPA (and CARB) have decided to not use a level playing field, but instead have chosen to provide over twice the financial incentive percentage to electric vehicles, relative to hydrogen fuel cell vehicles.

This is quite disappointing, especially due to the nascent state of hydrogen fuel cell vehicles. Anyone familiar with technoeconomic analysis knows that new technologies (e.g. FCEVs) are generally more expensive than more established technologies (e.g. EVs). This is due to the fact that costs always come down as technologies mature, coupled with the fact that the increasing adoption of new technologies leads to economies of replication (hello assembly lines!). On this basis alone, I would recommend that the EPA (and CARB) revise their plans, and allow financial incentives of 60-100% for FCEV refueling stations, matching the incentive rates for battery electric vehicles.

To summarize, it is good that the first VW emissions scandal settlement includes financial incentives to speed the adoption of EVs and FCEVs. Unfortunately, it is bad that the VW settlement provides significantly larger rates of financial incentives for FCEV hydrogen refueling stations.